The Alcohol and Tobacco Tax and Trade Bureau (TTB) is introducing exciting and long-awaited updates to how wineries handle the permit application process. These changes are a significant step towards a more efficient, less burdensome, and ultimately more flexible regulatory environment for wine businesses. The main goal is to simplify and accelerate the process of establishing and operating a winery, benefiting the entire industry from small artisan producers to large-scale operations.
This blog discusses key proposed changes to the Code of Federal Regulations and their tangible benefits for your winery.
What Is 27 CFR Part 24?
27 CFR Part 24 is the section of the Code of Federal Regulations that outlines federal rules for wine operations, including permits, production, record keeping, and reporting. If you produce wine in the U.S., this is the backbone of your legal compliance with the TTB.
Key Proposed Changes to 27 CFR Part 24:
1. Simplified Winery Applications:
The TTB plans to eliminate the need for detailed written descriptions of certain operations (like spirits or volatile fruit-flavor concentrate operations) when applying to set up a wine premises, as outlined in proposed amendments to 27 CFR Part 24. This will save time on narrative explanations, allowing wineries to focus on their core business and complete applications faster.
2. Focused Wine Premises Descriptions:
Future wine premises descriptions will be more precise and directly relevant. Instead of broad narratives, applications will require a focused description of the wine premises, concentrating on essential details such as building layouts, dimensions, and critical security measures. This streamlines requirements and offers flexibility, allowing submission in narrative or diagram form. TTB officers may also request photographs for clarity.
3. Extended Reporting Deadlines:
The TTB proposes extending the reporting deadline for certain business changes from 30 to a more generous 60 days. This provides more time for proprietors to manage administrative tasks, applying to updates in business information, control, and corporate officers. A new list of corporate officers can also be submitted via a simple letter, reducing bureaucratic hurdles. However, changes requiring a federal basic permit will still adhere to the existing 30-day deadline due to current statutory requirements under 27 U.S.C. Chapter 8.
4. Easier Trade Name Adoption:
Introducing a new trade name for products or operations will be significantly simplified. Wineries may only need to notify the TTB instead of filing an entirely new amended application, as per proposed changes to 27 CFR 24.110. This reduces administrative hassle, allowing quicker operation under the new name with a simple letterhead notice. However, federal law still strictly prohibits false or misleading statements on labels and in advertising.
5. Flexible Record Keeping:
Proposed updates allow more flexibility in where records are maintained. Wineries can keep records at a location other than their physical wine premises without prior TTB approval, provided they notify the TTB. This offers greater operational freedom, especially for businesses with off-site administrative offices or those using cloud-based systems.
6. Clarified Ownership Interest Reporting:
The proposed changes clarify ownership interest reporting. Disclosure will only be required for individuals or entities with a 10% or greater interest in the business, aligning with proposed amendments to 27 CFR Part 1. For wineries requiring a federal basic permit, changes in ownership interests must still be reported within 30 days via an amended application, as mandated by 27 U.S.C. 204(h). This 30-day deadline is a federal requirement, as basic permits cannot be sold or transferred and terminate 30 days after a change in control, necessitating a new application for the new controlling entity.
7. Updated Security Requirements:
The TTB is updating its security requirements, eliminating the current vague narrative description. A new section will specifically require security measures to prevent unauthorized access and theft of commercial property. Applications will need to include a certification that premises security meets these new requirements, as detailed in proposed revisions to 27 CFR 24.27. These updates align TTB security standards with current industry practices, offering more flexibility in securing premises.
The Benefits of Modernizing the Federal Regulations for Wine:
These proposed amendments are more than just administrative adjustments; they are strategically designed to bring significant advantages to the wine industry:
- Reduced Regulatory Burden: The most immediate benefit will be a substantial reduction in paperwork and the need for overly detailed descriptions, leading to less time on administrative tasks and more focus on production, sales, and innovation.
- Increased Industry Flexibility: Extended deadlines and simpler processes offer greater operational freedom and adaptability, allowing wineries to respond to business changes more efficiently and manage administrative responsibilities with less stress.
- Streamlined Compliance: By focusing on essential information and clarifying requirements, the TTB aims to ensure compliance with federal regulations while minimizing unnecessary obstacles, fostering a more cooperative and efficient regulatory environment.
What This Means for Small Businesses:
A crucial aspect of these proposed changes is their anticipated positive impact on small businesses, the backbone of the wine industry. The TTB explicitly believes this proposed rule will not have a significant negative economic impact on small businesses. In fact, its primary goal is to reduce burdens by streamlining information collection, extending deadlines, and allowing off-premises record keeping, consistent with the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). While many small businesses will be affected, the TTB expects modest burden reductions across the board. The TTB will actively seek feedback from the Small Business Administration (SBA) on the specific impact of these changes on small businesses.
Need Help Navigating TTB Compliance for Your Wine Business?
These proposed changes are part of the TTB’s ongoing effort to simplify processes and alleviate burdens on the wine industry while rigorously ensuring federal compliance. They are specifically designed to make information collection easier and more efficient by:
- Eliminating certain information requirements deemed unnecessary or inefficient from wine premises applications.
- Streamlining and clarifying the description of wine premises and its associated security measures, making it more practical and less ambiguous for applicants.
These modernizations represent a positive step forward, promising a more efficient and responsive regulatory landscape for the thriving wine industry.
Rogoway Law Group helps clients across the wine industry in California, from boutique vineyards to large producers, navigate every aspect of licensing and compliance. We’ll ensure your business stays compliant, efficient, and ready to grow under these proposed rules.
For expert legal assistance with TTB modernizations and strategic legal counsel tailored to your winery, contact the wine lawyers at Rogoway Law Group, a Professional Corporation.
